Archive - May 2015

Despite claiming that its “people’s Uber” service in China, involving private drivers, is simply a type of car-pooling service; the bubblicious company continues to burn its series ZZ financings on legal briefs around the world. That appears to be a total waste when it comes to China as IBTimes reports, police, transport and commercial officials in the southern Chinese city of Guangzhou have raided the local offices of online car service company Uber, amid continuing tension in China over the legality of ride-booking apps using private vehicles, which officials say have disrupted the country’s heavily regulated taxi market.

Deutsche Bank's LIBOR settlement likely should have landed the bank on the SEC's "bad actor" list, but thankfully, the CFTC was willing to write language into its settlement with the bank which effectively allows the German lender to skirt Dodd-Frank, proving yet again that it's good to be TBTF.

We have never, ever, seen a larger divergence between long-term earnings growth expectations and equity valuations...

Q: How do you make a small fortune on Wall Street?

A: Start with a large fortune.

~ old investing adage

A look at the current data on executions by country shows that although China is still number one over the long haul, two other countries have put on a strong showing YTD...

BANZAI7 FOOD AND BEVERAGE WARNING...

While we are delighted that you take advantage of the daily posts on Zero Hedge detailing flagrant spoofing across various asset classes (which you use to promptly ban two gold manipulators yesterday), the reality is that with every passing day the market becomes more disjointed, more fragmented, more broken.

"Too Big to Fail is a license for recklessness. These institutions defy notions of fairness, accountability, and responsibility... They benefit from the upside and expose the rest of us to the downside of their decisions. These banks are too powerful politically as well... Effectively we're hostages because their failure would be so harmful. They're likely to be bailed out if their risks don't turn out well and the largest financial firms in America can hide an enormous amount of risk in derivatives which creates a house of cards — a very fragile system."

On top of the world...

"What investors need to know today is that they are currently priced just as high as they were back then! The problem is they once again want their cake and to eat it, too. Despite paying an extremely high price for stocks today they also expect a high rate of return. A few recent polls show investors expecting to get 10% per year from their equity investments right now. Some are even expecting to generate twice that much and there’s just no chance it’s going to happen."

Numerous data points are showing the economy is approaching if not already in recession. And yet stocks are pricing in economic perfection. By the time they catch on… we’ll see a serious market correction.

Oil prices are showing some signs of life as key indicators start pointing in a bullish direction.

Spin that Phil LeBeau...

"The effects on underlying inflation have so far been tepid. What is worrisome is that market participants still do not see consumer price inflation returning to the ECB’s 2% target on a sustained basis, let alone going above it, over any reasonable time horizon," Goldman says. And while the bank is ultimately confident that the Goldmanite in charge of the ECB will succeed in driving up inflation over time, the market would be wise to note that the US and Japanese experience with QE don't provide much in the way of empirical support for that contention.